1. Compensation and Incentives
flowchart
By : Tamer Moustafa
Date:01/12/2015

2. Compensation and Motivation
Compensation is a wide concept and it is defined as the total
package in cash or any kind that is paid by an enterprise to an
employee in return to the work done by the latter for a certain
period of time. It may include:
1-Salaries or wages.
2-Cash allowance.
3-Overtime pay.
4-Bonuses.
5-Healthcare plan.
6-Vehicles or others that are
provided for the personal use
of the employee.
7-Paid time off and various
other types of compensation.
Motivation is creating the interest in doing a certain Job
and this may be through:
1-Attention to each individual and
assigning responsibilities.
2-Transparency.
3- A defined career path and growth.
4-Training and development
programs.
5-Fair pay and a good job match.
6-Encouraging work/life balance.
7-The Use of team rewards.
8-Rewarding high performance .
9-Recognition .

3. Factors affecting compensation and compensation
effect on Motivation
Compensation Motivation
Internal factors(direct) that affect
compensation
1-The ability of the organization
to pay.
2-Employee performance,
seniority and potential.
3-Organisation strategy.
4-Position of the company in the
business cycle.
5-Equity considerations.
6-Good job analysis and job
evaluation.
7-Productivity of workers.
External(indirect) factors that
affect compensation
1-Laws and regulation.
2-Labor market.
3-Economy.
4-Inflation.
5-Demand and supply of labor.
6-Union pressure.
7-Cost of living.
The increase in
compensation will lead to
increased motivation but it
is to be noted that
motivation doesn't t
depend solely on
compensation.
Factors affecting the
level of motivation:
1-Achievement
2-Recognition
3- Work itself
4-Responsibility
5-Advancement
6-Growth
Presence o f these
factors positively
affect motivation.
Factors that will not
increase motivation but
there absence decreases
motivation (hygiene
factors)
1-Company policy.
2-Supervision .
3-Relationship with Boss .
4-Work conditions.
5-Salary.
6-Relationship with
Peers.

4. References
1-MSG (n.d.) Compensation Management - Meaning and Important Concepts [Online] MSG. Available from :
http://www.managementstudyguide.com/compensation-management.htm [Accessed 01/12/2015]
2-WIKIPEDIA (2010) Compensation of employees [Online] Wikepedia.Org. Available from : https://en.wikipedia.org/wiki/Compensation_of_employees
[Accessed 01/12/2015]
3- LAWYERMENT.COM (2011) What is Motivation? What are the Concepts of Motivation? [Online] Lawyerment.Com Available from :
http://www.lawyerment.com/library/articles/Self_Improvement/Motivation/317.htm [Accessed 01/12/2015]
4- WIKIHOW.COM (n.d.) How to Motivate Your Employees [Online] Wikihow.com
Available from : http://www.wikihow.com/Motivate-Your-Employees [Accessed 01/12/2015]
5-WHAT IS HUMAN RESOURCE.COM (n.d.) Factors Influencing Employee Compensation [Online] What is human resource .Com
Available from : http://www.whatishumanresource.com/factors-influencing-employee-compensation [Accessed 01/12/2015]
6- MSG (n.d.) Factors affecting compensation-part 1 [Online] MSG Available from : http://www.managementstudyguide.com/factors-affecting-
compensation.htm [Accessed 01/12/2015]
7-ACCOUNTING-MANAGEMENT (n.d.) Factors affecting compensation system.[Online] Accountlearning.Blogspot. Available from :
http://accountlearning.blogspot.com.eg/2013/03/factors-affecting-compensation-system.html [Accessed 01/12/2015]
8- ARAB BRITISH ACADEMY FOR HIGHER EDUCATION (n.d.) Herzberg's Motivation-Hygiene Theory (Two Factor Theory) [Online] Abahe.Co.Uk Available
from : http://www.abahe.co.uk/Free-En-Resources/Theories-of-Management/Herzberg-Motivation-Hygiene-Theory.pdf [Accessed 01/12/2015]